The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Governance and Ethics Board (AGEB / the board) approved in its 27^th meeting the issuance of the Governance Standard (GS) 14 on Islamic Crowdfunding Governance.

Technology adoption in the financial services sector is surpassing many other sectors. This can be observed in the existing financial services providers and the new entrants in the market who are introducing newer models of financial services, based on financial technology (FinTech). As a result of this challenge and taking into consideration the absence of relevant standards, AGEB has taken multiple initiatives for the development of standards in different areas of FinTech. The governance standard on Islamic crowdfunding is the first of such projects.

This standard aims to set out a comprehensive framework for the governance of Islamic crowdfunding. It addresses various significant aspects of governance and control systems including but not limited to compliance with Shari’ah principles and rules, safeguarding the stakeholders’ interests, information technology and data protection, as well as, the governance structure applicable to each Islamic crowdfunding issuance at the different stages of the transaction. Additionally, it sheds light on the transparency and disclosure requirements to ensure fair and equitable transactions, to the maximum extent possible.

Mr. Farrukh Raza, Chairman AGEB stated that: “The issuance of a governance standard on Islamic crowdfunding is expected to have a significant impact on the development of Islamic finance industry. I am confident it will contribute to the implementation of good governance practices for Islamic crowdfunding. It will further enhance public confidence in the Islamic crowdfunding sector and promote entrepreneurship which will undoubtedly result in the development of the social finance sector”. He added that: “We highly appreciate the efforts and time devoted by the board, working group, and the secretariat in developing this standard despite their eventful work agendas and engagements”.

On this occasion, Mr. Omar Mustafa Ansari, Secretary General, AAOIFI stated that: “I would like to extend my sincere gratitude to the board and relevant working group for their tireless efforts and remarkable commitment. Their extensive experience in the Islamic crowdfunding sector has contributed to the development of a robust governance standard which will promote trust among stakeholders”. He added that: “During the year several public hearings in English and Arabic languages were held as part of the standards development process to obtain industry feedback and benefit from the knowledge and experience of Shari’ah scholars, professional individuals, regulators and academicians. This ensures the issuance of a high-quality standard for the Islamic finance industry”.

The final standard on Islamic Crowdfunding Governance can be accessed by CLICKING HERE